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London House Prices Drop by £40,000 Following Brexit

Published On: June 27, 2016 at 9:37 am

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London house prices have dropped by around £40,000 following Friday’s EU referendum result, according to the latest analysis from estate agent Stirling Ackroyd.

Eurozone buyers can now snap up London homes for up to €50,900 cheaper, reports the agent.

London House Prices Drop by £40,000 Following Brexit

London House Prices Drop by £40,000 Following Brexit

Friday’s depreciation in sterling means that the average property in the capital now costs just €579,200, compared to a record high of €630,100 in November 2015. This change means that homes in London have become €50,900 cheaper for euro buyers, equivalent to £40,900.

The €50,900 reduction in prices amounts to an average 8% discount in the London property market.

The Managing Director of Stirling Ackroyd, Andrew Bridges, comments: “European buyers can now snap up real bargains across London. Overnight, London has become a more affordable global property hotspot – particularly for those paying in euros.”

In sterling terms, London house prices are still historically high, but this masks some underlying cooling in the high end of the market.

The agent found that the top 25% of the London property market experienced an annual decline in prices of 2.4% in the last quarter of 2015 – contrasting to the 8.2% rate of growth recorded in the majority of neighbourhoods.

The most luxurious areas of central London are expected to be hit particularly hard by the referendum result, with Kensington High Street and Notting Hill experiencing sharp falls in house prices during the last quarter of 2015, of 11.8% and 10% respectively.

However, investment firm London Central Portfolio claims that the market will prove resilient to the Brexit.

Bridges concludes: “After the shock of the referendum, calm will return to the market and people will see the bright lights of London are undimmed.

“London’s reputation as a valuable property investment hotspot remains undiminished and the capital will continue to attract an abundance of potential buyers. London will retain its global capital city status.”

Could Brexit be beneficial for landlords?

Published On: June 27, 2016 at 9:04 am

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Categories: Landlord News

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As Britain continues to come to terms with the shock EU referendum result, one property expert has suggested that the sense of doom and gloom could well be premature.

Director of Balogores Property Group, Howard Leicester, has given his reaction to the Brexit vote.

Brexit shock

Mr Leicester noted that, ‘Brexit is certainly a shock to the system and one that will no doubt have far reaching ramifications for our industry moving forward. But the more I think about it, the more I actually think the next few months could be a real boom for our sector.’[1]

Leicester urges Britain to look at the short-term benefits of the result. He feels there could be an immigration boom from Europe, before any exit deal is finalised, which could:

  • lead to more people needing rental property
  • attract more landlords to the market
  • produce a further rise in rental prices

In times of economic uncertainty, people could look to rent for longer. In recent times, a shrinking of the economy has seen the rental market stay strong.

Could Brexit be beneficial for landlords?

Could Brexit be beneficial for landlords?

Short-term pain, long-term gain?

Continuing, Leicester observed, ‘Britain has a very strong trading history and whilst there seems no doubt we will suffer some short term turmoil and a possible recession, or at least much reduced growth. However, there seems very little doubt that we will come out the other side. History tells us we always return much stronger and leaner.’[1]

Summing up, Leicester said, ‘so is it all bad? I don’t think so when you look at our industry and the way it has grown and matured over the last 10-15 years. In actual fact, this should be seen as another opportunity for landlords to expand their portfolios and for the best agents to make sure they are at hand to help clients though, with balanced and professional support and the advice.’[1]

‘In other words, those of us who are experienced, knowledgeable and experts in our fields, will be the ones that actually see the opportunity and grab it,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/how-will-the-lettings-industry-be-affected-by-brexit.html

London Property Market Will Prove Resilient to Brexit, Says Investment Firm

Published On: June 27, 2016 at 9:03 am

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The central London property market will prove resilient to last week’s Brexit announcement, according to London Central Portfolio (LCP), a leading investment firm.

LCP reports that the impact of Brexit has been amplified around the world by the resignation of the Prime Minister, David Cameron.

While the property market will be hit by the uncertainty caused by these political and economic factors, LCP believes that the prime central London property market will experience a surge in activity. Playing such an important role in global financial markets, LCP claims that the capital’s housing sector will prove resilient to volatility.

Prior to Thursday’s EU referendum, LCP reported that sterling had already dropped to lows not seen since the global financial crisis, with some buyers enjoying discounts of up to £26,000 in the London property market.

London Property Market Will Prove Resilient to Brexit, Says Investment Firm

London Property Market Will Prove Resilient to Brexit, Says Investment Firm

Friday brought the news that sterling had dropped by a further 10% and is expected to fall even more sharply in the short term. However, it is possible that the Bank of England will keep interest rate rises on hold. The Bank’s full statement following the Brexit can be found here: /bank-england-releases-statement-following-eu-referendum-result/

LCP even claims that interest rates could come down, which it believes could trigger a boom in the prime central London market, similar to that witnessed during the recession.

At present, however, markets are still reacting in shock to the news of the UK’s exit from the EU, which will undoubtedly cause a short-term downturn in the finance sector.

Despite this, LCP anticipates that the markets will recover over the two-year Brexit negotiation period, and London will continue to hold its position as a financial powerhouse.

LCP notes that international investors will continue to be attracted to prime central London’s reputation as an aspirational, cultural and educational centre. It claims that these factors will be unaffected by the Brexit, meaning that investors will still regard the market as lucrative.

Additionally, LCP points out that the EU has played only a limited role in attracting international capital to the London property market, with just 12% of buyers coming from Europe. It says that even if European buyers vacate the capital, there will be very little net effect on the market.

Instead, the firm predicts a surge of new buyers who have sat on the sidelines awaiting the EU referendum result.

In the first half of this year, prices in prime central London dropped significantly in the face of global issues – falling oil prices, uncertainty in China and tax hikes for buy-to-let landlords.

Factoring in the potential for an out vote, price growth in central London fell from its long-term annual average of 8.7% to 4.7%, while investors adopted a wait-and-see attitude. LCP expects that the market will now harden as investors re-enter the market.

Reflecting its predictions prior to the referendum, LCP now believes that international investors will capitalise on a weak sterling and competitively priced market. It insists that the Brexit creates an investment opportunity for new buyers.

The CEO of LCP, Naomi Heaton, explains: “Prime central London real estate is expected to benefit from a flight to quality and the security of blue-chip tangible assets, against a background of highly volatile financial markets.

“It is now likely that property prices in prime central London will increase. Whilst LCP had originally predicted that this would not occur until 2017, the signs are that the re-entry of investors into the market will be more rapid than originally expected.”

A Landlord’s Guide to Turning a House into Flats

Published On: June 26, 2016 at 8:35 am

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Converting a house into flats is becoming increasingly popular with landlords, who can maximise their rental returns and capital growth through dividing larger properties into smaller units.

If you decide to rent out smaller flats rather than one large home, you will maximise your rental income in the short-term and increase your profit on sale in the long-term.

So where do you start?

London estate agent Portico has put together a guide on everything that landlords need to know when converting a house into flats:

Research the market  

Before you even plan a conversion project, you must make sure that there is high demand for flats in the area that you’re considering.

A Landlord's Guide to Turning a House into Flats

A Landlord’s Guide to Turning a House into Flats

Researching the current market is the best way to determine whether there is strong tenant demand for the type of property that you will create. Look at supply levels in your target market and identify the type of tenant that will be looking for your property type.

If the area is popular with young professionals or couples, then you know that they will generally be looking for smaller homes. If you find that families are seeking rental properties in the location you choose, conversion does not seem like a sensible option.

Planning implications 

Once you have found the right market for you and have looked into purchasing a buy-to-let property, the next thing to do is contact the planning department of your local council, as you are likely to need planning permission.

If you are given the go ahead by the council, you will then need to apply for building regulations before you start the conversion project.

Cost

The cost of converting will vary hugely from property to property, depending on the size, condition and the number of flats you’re creating. Portico expects a basic conversation, including putting up walls, installing bathrooms and central heating units, to cost around £25,000. You will then need to talk to utility providers so that each address has its own gas, electricity and water meters.

You must consider the following when budgeting for the project:

  • Planning approval from the local planning department.
  • Building regulation approval.
  • Installing new utility meters.
  • Fitting a new kitchen and bathroom.
  • Finance for development.
  • Sound deadening and tests.
  • Separate boilers.
  • Separate heating systems.
  • Creating a second entrance.
  • Decorating costs.

Finance

Portico advises investors to shop around for the best mortgage rates and loans before undertaking a conversion project, as this will be where your profit margin is made.

To ensure that your buy-to-let investment is protected during refurbishment work, put a comprehensive Unoccupied Property Insurance policy in place before you have tenants in place.

Law

Make sure that you inform the solicitor dealing with the legal transaction of your plans to convert, and ask them to identify any legal barriers to you doing so once the sale is complete, for example, caveats in the deeds.

Your solicitor will also be able to draw up leases for separate dwellings, which you will need if you plan on selling the properties.

Good luck with your conversion project!

“The Only Certainty is Uncertainty”, Says HomeOwners Alliance Following Brexit

Published On: June 25, 2016 at 8:55 am

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Friday morning brought the news that the UK has decided to leave the European Union, with 51.9% of the vote.

"The Only Certainty is Uncertainty", Says HomeOwners Alliance Following Brexit

“The Only Certainty is Uncertainty”, Says HomeOwners Alliance Following Brexit

Now that plans for a Brexit are in full swing, the property industry is reacting to how the vote will affect the housing market.

Paula Higgins, the CEO of the HomeOwners Alliance, believes that “the only certainty is uncertainty” in the short term.

Uncertainty has certainly affected the property market ahead of the EU referendum, with evictions specialist Paul Shamplina noting that landlords have adopted a wait-and-see approach.

So how will our personal finances be affected now that the UK has decided to leave? This guide from landlord insurance specialists Just Landlords details how the Brexit will hit households: https://www.justlandlords.co.uk/news/brexit-will-affect-finances/

Higgins also reports that property sales fell ahead of the EU referendum, and this is expected to continue, as people wait for events to unfold before committing to big financial decisions.

The National Association of Estate Agents and the Association of Residential Letting Agents have responded to how the housing market will react to the vote to leave: /brexit-mean-housing-market/

Higgins’ full statement is as follows: “No one knows the impact of this momentous vote for the housing market, so, in the short term, the only certainty is uncertainty. This is bad news for financial markets and will probably impact interest rates longer term, so mortgage holders will want to watch this space.

“House sales fell ahead of the referendum, and we can expect people to continue to watch events unfold before making any big financial decisions. We can expect the rate of house price growth to slow nationwide, while in London, the limited housing supply could reduce the impact on house prices.”

We will continue to keep you updated with the property industry’s reactions to the Brexit vote and how the decision will affect landlords.

PCL market to be hardest hit by referendum result

Published On: June 24, 2016 at 11:55 am

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The shock news that Britain is to leave the EU is likely to have the largest detrimental effect on the prime property market in London.

With sales activity and property price growth in the sector continually slowing since 2014, experts had already underlined the danger of a Brexit driving further reductions.

Prime falls

Liam Bailey of Knight Frank, believes, ‘there is no doubt that the vote in favour of Brexit will generate a period of renewed uncertainty in the prime London residential market. Some demand, especially from investors, will be delayed and in some cases redirected to other markets although the significance of those trends should not be overstated.’

‘It is not easy to identify an obvious alternative destination for investors despite short term nervousness. On the eve of the vote the pound sat 14% below its mid-2014 peak meaning pricing in the prime market was more attractive for dollar buyers. While a further weakening of the pound could increase inward investment, this impact will be constrained by the fact that around 80% of central London buyers are UK residents,’ he added.[1]

Interest rate cuts?

Bailey went on to say, ‘it seems a reasonable assumption to make that interest rates will be lower for longer, despite the risk of imported inflation from a weaker pound. While the long term benefit of ultra-low interest rates on the housing market may be questionable, in the short term they will act to underpin demand especially for equity rich buyers with access to the best funding rates.’[1]

‘While we are entering a period of renewed uncertainty in the UK and London market, ongoing issues around EU and especially Eurozone stability, which will be highlighted in the run up to French and German elections, are likely to counter this risk and shore-up London’s safe haven appeal,’ he concluded.[1]

PCL market to be hardest hit by referendum result

PCL market to be hardest hit by referendum result

Risks

Peter Wetherell, chief executive of Wetherell, believes there is now a Pandora’s Box for the London property market. He feels that this will greatly assist foreign investors.

Wetherell suggests, ‘This is a market for risk takers and people able to spot high risk, but potentially lucrative opportunities that have emerged overnight due to the fluxes in the markets. Dollar based Middle East and Asian investors in particular will now look at short term buying opportunities in the central London property market and look at acquiring residential property priced up to £6 million.’[1]

‘Now that UK will not be part of the EU in the future then industry construction costs could rise by up to 15% since currently construction materials imported from and exported to the EU are free of duty and taxes. Many site/construction staff working in London are people who originate from countries across the EU the future of all of this will need to be looked at quickly and decisively,’ Wetherell added.[1]

[1] http://www.propertywire.com/news/europe/brexit-london-property-market-2016062412069.html